Strong Results Driven by Connectivity and
Audience Solutions
Raises Fiscal 2017 Full-Year EPS
Guidance
Acxiom® (Nasdaq: ACXM), the data foundation for the world’s best
marketers, today announced financial results for its third quarter
ended December 31, 2016.
This Smart News Release features multimedia.
View the full release here:
http://www.businesswire.com/news/home/20170131006351/en/
Financial Highlights
- Revenue: Total revenue was $223
million, up 1% compared to the third quarter of last year driven by
growth in Connectivity and Audience Solutions offset by the
divestiture of Acxiom Impact.
- Operating Income (Loss): GAAP
operating income from continuing operations was $9 million compared
to a small loss in the prior year. Non-GAAP operating income from
continuing operations improved 50% to approximately $33
million.
- Earnings (Loss) per Share: GAAP
diluted earnings per share from continuing operations were $0.01
compared to a loss per share of $0.01 in the prior year. Non-GAAP
diluted earnings per share from continuing operations were $0.24,
up from $0.18 a year ago.
- Operating Cash Flow: Operating
cash flow from continuing operations improved to $49 million, up
from $37 million in the prior year. For the trailing twelve-month
period, operating cash flow from continuing operations was $128
million, up from $100 million in the comparable period.
- Free Cash Flow to Equity: Free
cash flow to equity improved to $28 million, up from $14 million in
the prior year. For the trailing twelve-month period, free cash
flow to equity was $53 million, up from $3 million in the
comparable period.
Segment Results
Marketing Services
- Revenue was $101 million, down 13%
compared to the third quarter of last year. Marketing Database and
Strategy & Analytics revenue grew 1% year-over-year, but was
more than offset by the divestiture of Acxiom Impact.
- Gross margin improved from 33% to
37%.
- Segment income was $21 million, up 4%
compared to the prior year. Segment margin improved to 21%.
Audience Solutions
- Revenue was $83 million, up 8% compared
to the prior year.
- Gross margin improved from 59% to
64%.
- Segment income was $35 million, up 13%
compared to the prior year. Segment margin improved to 41%.
Connectivity
- Revenue, which includes the Arbor and
Circulate acquisitions, was $39 million, up 36% compared to the
third quarter of last year. LiveRamp™ product revenue grew 61%
year-over-year.
- Gross margin improved from 57% to
60%.
- Segment income was $2 million compared
to a loss of $1 million in the prior year. Segment margin improved
to 5%.
A detailed discussion of our non-GAAP financial measures and a
reconciliation between GAAP and non-GAAP results is provided in the
schedules to this press release.
"Our global momentum continues to accelerate,” said Acxiom CEO
Scott Howe. “In addition, the integration of Arbor and Circulate is
well underway and we are delivering the client benefits and
financial synergies we anticipated. This is a win for our partner
network, clients and shareholders.”
Recent Business Highlights
- LiveRamp completed the acquisitions
of Arbor and Circulate, two companies at the forefront of
helping publishers connect people-based data to the marketing
ecosystem. The acquisitions double LiveRamp's publisher
partnerships and bring strong "mobile-first" technology,
international reach and impressive teams to LiveRamp.
- Connectivity added more than 50 new
direct customers during the quarter and added over 30 new
partner integrations. Marketers can now onboard and activate their
data across a growing network of more than 450 publishers and
marketing technology providers.
- Audience Solutions launched the
Audience Cloud™ for advanced cross-channel management of Acxiom
data. The self-service tool simplifies the process for creating and
distributing audiences created from Acxiom data, resulting in
better campaign planning, optimized marketing spend and increased
ROI.
- Acxiom was certified as a great
workplace by the independent analysts at Great Place to Work®
based on extensive ratings provided by its associates in anonymous
surveys. In addition, LiveRamp was recently recognized as one of
the top ten Best Places to Work by Glassdoor.
Financial Outlook
Acxiom’s non-GAAP guidance excludes the impact of non-cash
compensation, purchased intangible asset amortization,
restructuring and merger charges, the gain on the disposal of
Acxiom Impact and separation and transformation costs.
For fiscal 2017, Acxiom expects to report:
- Revenue in the range of $870 million
to $875 million
- GAAP diluted earnings per share of
approximately $0.11
- Non-GAAP diluted earnings per share
of approximately $0.70
Included in the Company’s revenue guidance is approximately $20
million of revenue from its disposed Acxiom Impact business.
Conference Call
Acxiom will hold a conference call at 4:00 p.m. CT today to
further discuss this information. Interested parties are invited to
listen to the call which will be broadcast via the Internet at
investors.acxiom.com. A slide presentation will be referenced
during the call and can be accessed here.
About Acxiom
Acxiom provides the data foundation for the world’s best
marketers. We enable people-based marketing everywhere through a
simple, open approach to connecting systems and data that drives
seamless customer experiences and higher ROI. A leader in identity
and the ethical use of data for more than 45 years, Acxiom helps
thousands of clients and partners around the globe work together to
create a world where all marketing is relevant. For more
information about Acxiom, visit Acxiom.com.
Forward-Looking Statements
This release and today’s conference call contain forward-looking
statements including, without limitation, statements regarding
expected levels of revenue and earnings per share. Such
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially.
The following are factors, among others, that could cause actual
results to differ materially from these forward-looking statements:
the possibility that the expected revenue from the divisions may
not be realized within the expected timeframe; the possibility that
the integration of acquired businesses may not be successful as
planned; the possibility that certain contracts may not generate
the anticipated revenue or profitability or may not be closed
within the anticipated time frames; the possibility that
significant customers may experience extreme, severe economic
difficulty or otherwise reduce or cancel the amount of business
they do with us; the possibility that we will not successfully
complete customer contract requirements on time or meet the service
levels specified in the contracts, which may result in contract
penalties or lost revenue; the possibility that data purchasers
will reduce their reliance on us by developing and using their own,
or alternative, sources of data generally or with respect to
certain data elements or categories; the possibility that data
suppliers might withdraw data from us, leading to our inability to
provide certain products and services to our clients; the
possibility that we may not be able to attract, retain or motivate
qualified technical, sales and leadership associates, or that we
may lose key associates; the possibility that we may not be able to
adequately adapt to rapidly changing computing environments,
technologies and marketing practices; the possibility that we will
not be able to continue to receive credit upon satisfactory terms
and conditions; the possibility that negative changes in economic
conditions in general or other conditions might lead to a reduction
in demand for our products and services; the possibility that there
will be changes in consumer or business information industries and
markets that negatively impact the company; the possibility that
the historical seasonality of our business may change; the
possibility that we will not be able to achieve anticipated cost
reductions and avoid unanticipated costs; the possibility that the
fair value of certain of our assets may not be equal to the
carrying value of those assets now or in future time periods; the
possibility that unusual charges may be incurred; the possibility
that changes in accounting pronouncements may occur and may impact
these forward-looking statements; the possibility that we may
encounter difficulties when entering new markets or industries; the
possibility that we could experience loss of data center capacity
or interruption of telecommunication links; the possibility that
new laws may be enacted which limit our ability to provide services
to our clients and/or which limit the use of data; and the
possibility that other risks and uncertainties may emerge,
including those detailed from time to time in our current and
periodic reports filed with the Securities and Exchange Commission,
including our current reports on Form 8-K, quarterly reports on
Form 10-Q and annual reports on Form 10-K, particularly the
discussion under the caption “Item 1A. RISK FACTORS” in our Annual
Report on Form 10-K for the year ended March 31, 2016, which was
filed with the Securities and Exchange Commission on May 27,
2016.
With respect to the provision of products or services outside
our primary base of operations in the United States, all of the
above factors apply, along with the difficulty of doing business in
numerous sovereign jurisdictions due to differences in scale,
competition, culture, laws and regulations.
We undertake no obligation to update the information contained
in this press release or any other forward-looking statement.
Acxiom is a registered trademark of Acxiom Corporation.
To automatically receive Acxiom Corporation financial news by
email, please visit www.acxiom.com and subscribe to email
alerts.
ACXIOM CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(Dollars in thousands, except earnings (loss)
per share)
For the Three Months EndedDecember 31,
2016 2015 $Variance %Variance Revenues 223,312 221,193 2,119
1.0 % Cost of revenue 116,468 125,735 (9,267 )
(7.4 %) Gross profit 106,844 95,458 11,386 11.9 %
% Gross
margin 47.8 % 43.2 %
Operating expenses: Research and development 20,950 18,400 2,550
13.9 % Sales and marketing 43,048 36,581 6,467 17.7 % General and
administrative 31,620 36,793 (5,173 ) (14.1 %) Gains, losses and
other items, net 2,111 4,058 (1,947 ) (48.0 %) Total
operating expenses 97,729 95,832 1,897 2.0 %
Income (loss) from operations 9,115 (374 ) 9,489 2537.2 % %
Margin 4.1 % -0.2 % Other income
(expense): Interest expense (1,743 ) (1,948 ) 205 10.5 % Other, net
35 303 (268 ) (88.4 %) Total other expense (1,708 )
(1,645 ) (63 ) (3.8 %) Earnings (loss) from continuing
operations before income taxes 7,407 (2,019 ) 9,426 466.9 %
Income taxes 6,334 (1,580 ) 7,914 500.9 % Net
earnings (loss) from continuing operations 1,073 (439 ) 1,512 344.4
% Loss from discontinued operations, net of tax -
(971 ) 971 100.0 % Net earnings (loss) 1,073 (1,410 )
2,483 176.1 % Basic earnings (loss) per share: Net earnings
(loss) from continuing operations 0.01 (0.01 ) 0.02 345.4 % Net
loss from discontinued operations - (0.01 ) 0.01 100.0 % Net
earnings (loss) 0.01 (0.02 ) 0.03 176.4 % Diluted
earnings (loss) per share: Net earnings (loss) from continuing
operations 0.01 (0.01 ) 0.02 338.2 % Net loss from discontinued
operations - (0.01 ) 0.01 100.0 % Net earnings (loss) 0.01
(0.02 ) 0.03 174.2 % Basic weighted average shares
77,507 77,831 Diluted weighted average shares 79,851 77,831
ACXIOM CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(Dollars in thousands, except earnings (loss)
per share)
For the Nine Months EndedDecember 31,
2016 2015 $Variance %Variance Revenues 655,380 625,433
29,947 4.8 % Cost of revenue 359,392 364,756
(5,364 ) (1.5 %) Gross profit 295,988 260,677 35,311 13.5 %
%
Gross margin 45.2 % 41.7 %
Operating expenses: Research and development 58,631 57,489 1,142
2.0 % Sales and marketing 118,243 100,334 17,909 17.8 % General and
administrative 91,993 100,055 (8,062 ) (8.1 %) Impairment of
goodwill and other - 729 (729 ) (100.0 %) Gains, losses and other
items, net 2,724 7,369 (4,645 ) (63.0 %) Total
operating expenses 271,591 265,976 5,615 2.1 %
Income (loss) from operations
24,397 (5,299 ) 29,696 560.4 % %
Margin 3.7 %
-0.8 % Other income (expense): Interest expense
(5,244 ) (5,789 ) 545 9.4 % Other, net 135 666 (531 )
(79.7 %) Total other expense (5,109 ) (5,123 ) 14 0.3 %
Earnings (loss) from continuing operations before income taxes
19,288 (10,422 ) 29,710 285.1 % Income taxes 7,099
(3,456 ) 10,555 305.4 % Net earnings (loss) from continuing
operations 12,189 (6,966 ) 19,155 275.0 % Earnings from
discontinued operations, net of tax - 15,240 (15,240
) (100.0 %) Net earnings 12,189 8,274 3,915
47.3 % Basic earnings (loss) per share: Net earnings (loss)
from continuing operations 0.16 (0.09 ) 0.25 275.9 % Net earnings
from discontinued operations - 0.20 (0.20 ) (100.0 %)
Net earnings 0.16 0.11 0.05 48.1 % Diluted
earnings (loss) per share: Net earnings (loss) from continuing
operations 0.15 (0.09 ) 0.24 271.5 % Net earnings from discontinued
operations - 0.20 (0.20 ) (100.0 %) Net earnings 0.15
0.11 0.05 44.4 % Basic weighted average shares
77,475 77,903 Diluted weighted average shares 79,494 77,903
ACXIOM CORPORATION AND
SUBSIDIARIESRECONCILIATION OF GAAP TO
NON-GAAP EPS (1)(Unaudited)(Dollars in thousands, except
earnings (loss) per share)
For the Three Months EndedDecember 31,
For the Nine Months EndedDecember 31, 2016 2015 2016 2015
Earnings (loss) from continuing operations before income
taxes
7,407
(2,019 ) 19,288 (10,422 ) Income taxes 6,334 (1,580 )
7,099 (3,456 ) Net earnings (loss) from continuing
operations 1,073 (439 ) 12,189 (6,966 ) Earnings (loss) from
discontinued operations, net of tax - (971 ) - 15,240
Net earnings (loss) 1,073 (1,410 ) 12,189
8,274 Earnings (loss) per share: Basic
0.01 (0.02 ) 0.16 0.11 Diluted 0.01
(0.02 ) 0.15 0.11 Excluded items:
Purchased intangible asset amortization (cost of revenue) 4,621
3,754 12,588 11,262 Non-cash stock compensation (cost of revenue
and operating expenses) 13,427 8,046 33,955 23,529 Impairment of
goodwill and other - - - 729 Restructuring and merger charges
(gains, losses, and other) 2,111 4,058 3,354 7,369 Gain on sale of
Impact (gains, losses, and other) - - (629 ) - Separation and
transformation costs (general and administrative) 4,118 6,628 5,573
16,140 Accelerated amortization (cost of revenue) - 78
- 1,598 Total excluded items,
continuing operations 24,277 22,564 54,841
60,627
Earnings from continuing operations before
income taxes and excluding items
31,684 20,545 74,129 50,205 Income taxes (2) 12,751
6,399 29,513 17,194 Non-GAAP net
earnings 18,933 14,146 44,616 33,011
Non-GAAP earnings per share: Basic 0.24 0.18
0.58 0.42 Diluted 0.24 0.18
0.56 0.42 Basic weighted average shares
77,507 77,831 77,475 77,903
Diluted weighted average shares 79,851 79,346 79,494
79,336
(1)
This presentation includes non-GAAP
measures. Our non-GAAP measures are not meant to be considered in
isolation or as a substitute for comparable GAAP measures, and
should be read only in conjunction with our condensed consolidated
financial statements prepared in accordance with GAAP. For a
detailed explanation of the adjustments made to comparable GAAP
measures, the reasons why management uses these measures and the
material limitations on the usefulness of these measures, please
see Appendix A.
(2)
Income taxes were calculated using an
effective non-GAAP tax rate of 40.2% and 31.1% in the third quarter
of fiscal 2017 and 2016, respectively, and 39.8% and 34.2% for the
nine months ended December 31, 2016 and 2015, respectively. The
differences between our GAAP and non-GAAP tax rates were primarily
due to the net tax effects of the excluded items, including the
federal and state income tax benefit related to the sale of
Impact.
ACXIOM CORPORATION AND
SUBSIDIARIESRECONCILIATION OF GAAP TO
NON-GAAP INCOME (LOSS) FROM OPERATIONS
(1)(Unaudited)(Dollars in thousands)
For the Three Months EndedDecember 31,
For the Nine Months EndedDecember 31, 2016 2015 2016 2015
Income (loss) from operations
9,115
(374 ) 24,397 (5,299 ) Excluded items: Purchased
intangible asset amortization (cost of revenue) 4,621 3,754 12,588
11,262 Non-cash stock compensation (cost of revenue and operating
expenses) 13,427 8,046 33,955 23,529 Impairment of goodwill and
other - - - 729 Restructuring and merger charges (gains, losses,
and other) 2,111 4,058 3,354 7,369 Gain on sale of Impact (gains,
losses, and other) - - (629 ) - Separation and transformation costs
(general and administrative) 4,118 6,628 5,573 16,140 Accelerated
amortization (cost of revenue) - 78 - 1,598
Total excluded items, continuing operations 24,277
22,564 54,841 60,627 Income from
operations before excluded items 33,392 22,190 79,238
55,328
(1)
This presentation includes non-GAAP
measures. Our non-GAAP measures are not meant to be considered in
isolation or as a substitute for comparable GAAP measures, and
should be read only in conjunction with our condensed consolidated
financial statements prepared in accordance with GAAP. For a
detailed explanation of the adjustments made to comparable GAAP
measures, the reasons why management uses these measures and the
material limitations on the usefulness of these measures, please
see Appendix A.
ACXIOM CORPORATION AND SUBSIDIARIESRESULTS BY
SEGMENT(Unaudited)(Dollars in thousands)
For the Three Months EndedDecember 31, 2016 2015 $Variance
%Variance Revenues Marketing Services 101,177 115,725
(14,548 ) (12.6 %) Audience Solutions 83,399 77,046 6,352 8.2 %
Connectivity 38,736 28,422 10,314 36.3 % Total
operating segment revenues 223,312 221,193 2,118 1.0 % Gross
profit Marketing Services 37,494 38,561 (1,067 ) (2.8 %) Audience
Solutions 53,120 45,265 7,855 17.4 % Connectivity 23,091
16,130 6,961 43.2 % Total operating segment gross profit
113,705 99,956 13,749 13.8 % Gross margin % Marketing
Services 37.1 % 33.3 % Audience Solutions 63.7 % 58.8 %
Connectivity 59.6 % 56.8 % Total operating segment gross margin
50.9 % 45.2 % Income (loss) from operations Marketing
Services 21,127 20,309 818 4.0 % Audience Solutions 34,572 30,723
3,849 12.5 % Connectivity 1,877 (1,015 ) 2,892 284.9 % Total
operating segment income from operations 57,576 50,017 7,559 15.1 %
Operating income (loss) margin % Marketing Services 20.9 %
17.5 % Audience Solutions 41.5 % 39.9 % Connectivity 4.8 % -3.6 %
Total operating segment operating margin 25.8 % 22.6 %
ACXIOM CORPORATION AND SUBSIDIARIESRESULTS BY
SEGMENT(Unaudited)(Dollars in thousands)
For the Nine Months EndedDecember 31, 2016 2015 $Variance
%Variance Revenues Marketing Services 316,571 336,430
(19,859 ) (5.9 %) Audience Solutions 235,669 217,718 17,951 8.2 %
Connectivity 103,140 71,285 31,854 44.7 % Total
operating segment revenues 655,380 625,433 29,947 4.8 %
Gross profit Marketing Services 109,440 112,140 (2,700 ) (2.4 %)
Audience Solutions 143,030 121,259 21,772 18.0 % Connectivity
60,509 41,582 18,926 45.5 % Total operating segment
gross profit 312,979 274,981 37,998 13.8 % Gross margin %
Marketing Services 34.6 % 33.3 % Audience Solutions 60.7 % 55.7 %
Connectivity 58.7 % 58.3 % Total operating segment gross margin
47.8 % 44.0 % Income (loss) from operations Marketing
Services 61,109 55,070 6,039 11.0 % Audience Solutions 89,640
80,000 9,640 12.1 % Connectivity 3,831 (2,874 ) 6,705 233.3
% Total operating segment income from operations 154,580 132,196
22,384 16.9 % Operating income (loss) margin % Marketing
Services 19.3 % 16.4 % Audience Solutions 38.0 % 36.7 %
Connectivity 3.7 % -4.0 % Total operating segment operating margin
23.6 % 21.1 % ACXIOM CORPORATION AND
SUBSIDIARIESRECONCILIATION OF SEGMENT RESULTS(Unaudited)(Dollars in
thousands) For the Three Months
EndedDecember 31, For the Nine Months EndedDecember 31, 2016
2015 2016 2015 Total operating segment gross profit
113,705
99,956 312,979 274,981 Less: Purchased intangible asset
amortization 4,621 3,754 12,588 11,263 Non-cash stock compensation
2,240 666 4,404 1,443 Accelerated amortization - 78 -
1,598 Gross profit 106,844 95,458
295,988 260,677 Total operating
segment income from operations 57,576 50,017 154,580 132,196
Less: Corporate expenses 24,185 27,827 75,342 76,868 Purchased
intangible asset amortization 4,621 3,754 12,588 11,262 Non-cash
stock compensation 13,427 8,046 33,955 23,529 Impairment of
goodwill and other - - - 729 Restructuring and merger charges 2,111
4,058 3,354 7,369 Gain on sale of Impact - - (629 ) - Separation
and transformation costs 4,118 6,628 5,573 16,140 Accelerated
amortization - 78 - 1,598 Income
(loss) from operations 9,115 (374 ) 24,397 (5,299 )
ACXIOM CORPORATION AND SUBSIDIARIESRECONCILIATION OF
ADJUSTED EBITDA (1)(Unaudited)(Dollars in thousands)
For the Three Months EndedDecember 31, For the Nine
Months EndedDecember 31, 2016 2015 2016 2015 Net
earnings (loss) from continuing operations 1,073 (439 ) 12,189
(6,966 ) Income taxes 6,334 (1,580 ) 7,099 (3,456 )
Other expense (1,708 ) (1,645 ) (5,109 ) (5,123 ) Income
(loss) from operations 9,115 (374 ) 24,397 (5,299 )
Depreciation and amortization 19,947 20,811 61,097 63,221 Less:
Deferred interest amortization - 311 - 901
Adjusted depreciation and amortization 19,947 20,500
61,097 62,320 EBITDA 29,062
20,126 85,494 57,021 Other
adjustments: Non-cash stock compensation (cost of revenue and
operating expenses) 13,427 8,046 33,955 23,529 Impairment of
goodwill and other - - - 729 Gains, losses, and other items, net
2,111 4,058 2,724 7,369 Separation and transformation costs
(general and administrative) 4,118 6,628 5,573
16,140 Other adjustments 19,656 18,732
42,253 47,767 Adjusted EBITDA 48,718
38,858 127,747 104,788
(1)
This presentation includes non-GAAP
measures. Our non-GAAP measures are not meant to be considered in
isolation or as a substitute for comparable GAAP measures, and
should be read only in conjunction with our condensed consolidated
financial statements prepared in accordance with GAAP. For a
detailed explanation of the adjustments made to comparable GAAP
measures, the reasons why management uses these measures, the
usefulness of these measures and the material limitations on the
usefulness of these measures, please see Appendix A.
ACXIOM CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED
BALANCE SHEETS(Unaudited)(Dollars in thousands)
December 31,2016 March 31,2016 $Variance %Variance
Assets
Current assets: Cash and cash equivalents 137,850 189,629 (51,779 )
(27.3 %) Trade accounts receivable, net 137,523 138,650 (1,127 )
(0.8 %) Refundable income taxes 526 9,834 (9,308 ) (94.7 %) Other
current assets 48,035 37,897 10,138 26.8 %
Total current assets 323,934 376,010 (52,076 ) (13.8
%) Property and equipment 526,847 528,675 (1,828 ) (0.3 %)
Less - accumulated depreciation and amortization 352,842
345,632 7,210 2.1 % Property and equipment, net
174,005 183,043 (9,038 ) (4.9 %) Software, net
of accumulated amortization 51,308 55,735 (4,427 ) (7.9 %) Goodwill
591,102 492,745 98,357 20.0 % Purchased software licenses, net of
accumulated amortization 7,989 10,116 (2,127 ) (21.0 %) Deferred
income taxes 9,115 6,885 2,230 32.4 % Other assets, net 52,421
25,315 27,106 107.1 % 1,209,874
1,149,849 60,025 5.2 %
Liabilities and
Stockholders' Equity
Current liabilities: Current installments of long-term debt 36,050
32,243 3,807 11.8 % Trade accounts payable 43,117 37,717 5,400 14.3
% Accrued payroll and related expenses 45,082 61,309 (16,227 )
(26.5 %) Other accrued expenses 57,187 48,254 8,933 18.5 % Deferred
revenue 32,644 44,477 (11,833 ) (26.6 %) Total
current liabilities 214,080 224,000 (9,920 ) (4.4 %)
Long-term debt 200,798 157,897 42,901 27.2 % Deferred
income taxes 57,165 53,964 3,201 5.9 % Other liabilities
14,721 15,020 (299 ) (2.0 %) Stockholders' equity: Common
stock 13,222 13,039 183 1.4 % Additional paid-in capital 1,131,553
1,082,220 49,333 4.6 % Retained earnings 610,690 598,501 12,189 2.0
% Accumulated other comprehensive income 6,297 8,590 (2,293 ) (26.7
%) Treasury stock, at cost (1,038,652 ) (1,003,382 ) (35,270 ) (3.5
%) Total stockholders' equity 723,110 698,968 24,142
3.5 % 1,209,874 1,149,849 60,025 5.2 %
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands) For the Three Months Ended December
31, 2016 2015 Cash flows from operating
activities: Net earnings (loss) 1,073 (1,410 ) Earnings from
discontinued operations, net of tax - 971 Non-cash operating
activities: Depreciation and amortization 19,947 20,811 Loss (gain)
on disposal or impairment of assets (78 ) 48 Deferred income taxes
4,557 (5,140 ) Non-cash stock compensation expense 13,427 8,046
Changes in operating assets and liabilities: Accounts receivable
(4,597 ) (5,957 ) Other assets 4,974 (622 ) Accounts payable and
other liabilities 10,172 13,518 Deferred revenue (542 ) 6,753
Net cash provided by operating activities 48,933
37,018 Cash flows from investing activities: Capitalized
software (3,296 ) (3,627 ) Capital expenditures (9,557 ) (10,702 )
Data acquisition costs (196 ) (424 ) Net cash paid in acquisitions
(137,383 ) (5,386 ) Net cash used in investing activities (150,432
) (20,139 ) Cash flows from financing activities: Proceeds from
debt 70,000 - Payments of debt (8,062 ) (8,045 ) Sale of common
stock, net of stock acquired for withholding taxes 2,370 2,241
Excess tax benefits from share-based compensation 370 2,574
Acquisition of treasury stock - (10,274 ) Net cash provided
by (used in) financing activities 64,678 (13,504 ) Cash
flows from discontinued operations: From operating activities - 562
From investing activities - 1,675 From financing activities -
- Net cash provided by discontinued operations -
2,237 Effect of exchange rate changes on cash (738 )
(167 ) Net change in cash and cash equivalents (37,559 )
5,445 Cash and cash equivalents at beginning of period 175,409
180,945 Cash and cash equivalents at end of period
137,850 186,390
Supplemental cash flow
information: Cash paid during the period for: Interest 1,339
1,883 Income taxes 4,599 738 Other debt payments, excluding line of
credit 8,062 8,045 ACXIOM CORPORATION AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Dollars in thousands)
For the Nine Months Ended December 31, 2016
2015 Cash flows from operating activities: Net earnings
12,189 8,274 Earnings from discontinued operations, net of tax -
(15,240 ) Non-cash operating activities: Depreciation and
amortization 61,097 63,221 Loss (gain) on disposal or impairment of
assets (520 ) 209 Impairment of goodwill and other - 729 Deferred
income taxes (1,982 ) (4,856 ) Non-cash stock compensation expense
33,955 23,529 Changes in operating assets and liabilities: Accounts
receivable (6,161 ) (15,238 ) Other assets 8,653 (2,643 ) Accounts
payable and other liabilities (11,819 ) 3,182 Deferred revenue
(10,247 ) 9,205 Net cash provided by operating activities
85,165 70,372 Cash flows from investing activities:
Capitalized software (11,171 ) (10,360 ) Capital expenditures
(30,096 ) (33,822 ) Data acquisition costs (463 ) (1,135 ) Net cash
paid in acquisitions (137,383 ) (5,386 ) Net cash received in
disposition 16,988 - Net cash used in investing
activities (162,125 ) (50,703 ) Cash flows from financing
activities: Proceeds from debt 70,000 - Payments of debt (24,173 )
(79,183 ) Sale of common stock, net of stock acquired for
withholding taxes 9,670 6,343 Excess tax benefits from share-based
compensation 1,785 2,022 Acquisition of treasury stock (30,542 )
(37,535 ) Net cash provided by (used in) financing activities
26,740 (108,353 ) Cash flows from discontinued operations:
From operating activities - 10,277 From investing activities -
124,506 From financing activities - (206 ) Net cash provided
by discontinued operations - 134,577 Effect of
exchange rate changes on cash (1,559 ) (513 ) Net change in
cash and cash equivalents (51,779 ) 45,380 Cash and cash
equivalents at beginning of period 189,629 141,010
Cash and cash equivalents at end of period 137,850 186,390
Supplemental cash flow information: Cash paid
during the period for: Interest 5,301 6,220 Income taxes 4,796
6,004 Prepayment of debt - 55,000 Payments on capital leases and
installment payment arrangements - 269 Other debt payments,
excluding line of credit 24,173 24,120
ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION OF FREE CASH FLOW
TO EQUITY (1) (Unaudited) (Dollars in thousands)
06/30/15 09/30/15
12/31/15 03/31/16
FY2016
06/30/16 09/30/16 12/31/16 YTD FY2017
Net Cash Provided by Operating Activities 11,997 21,357 37,018
43,270 113,642 750 35,482 48,933 85,165 Less (plus):
Capitalized software (2,797 ) (3,936 ) (3,627 ) (4,520 ) (14,880 )
(3,982 ) (3,893 ) (3,296 ) (11,171 ) Capital expenditures (12,876 )
(10,244 ) (10,702 ) (13,601 ) (47,423 ) (10,694 ) (9,845 ) (9,557 )
(30,096 ) Data acquisition costs (430 ) (281 ) (424 ) (418 ) (1,553
) (20 ) (247 ) (196 ) (463 ) Payments on capital leases and
installment payment arrangements (63 ) - - - (63 ) - - - - Other
required debt payments (8,036 ) (8,039 ) (8,045 ) (8,048 ) (32,168
) (8,053 ) (8,058 ) (8,062 ) (24,173 ) Net cash received in
disposition - - - -
- - 16,988 -
16,988 Free Cash Flow to Equity (12,205
) (1,143 ) 14,220 16,683
17,555 (21,999 ) 30,427 27,822
36,250
(1)
This presentation includes non-GAAP
measures. Our non-GAAP measures are not meant to be considered in
isolation or as a substitute for comparable GAAP measures, and
should be read only in conjunction with our condensed consolidated
financial statements prepared in accordance with GAAP. For a
detailed explanation of the adjustments made to comparable GAAP
measures, the reasons why management uses these measures, the
usefulness of these measures and the material limitations on the
usefulness of these measures, please see Appendix A.
ACXIOM CORPORATION
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS-GAAP
(Unaudited) (Dollars in thousands, except earnings (loss) per
share)
Q3
FY17 to Q3 FY16 06/30/15 09/30/15 12/31/15
03/31/16 FY2016 06/30/16 09/30/16 12/31/16
YTD FY2017 % $ Revenues 196,895 207,345 221,193
224,655 850,088 214,801 217,267 223,312 655,380 1.0 % 2,119
Cost of revenue 117,709 121,312 125,735
123,626 488,382 122,819
120,105 116,468 359,392
-7.4 % (9,267 ) Gross profit 79,186 86,033 95,458 101,029 361,706
91,982 97,162 106,844 295,988 11.9 % 11,386
% Gross margin
40.2 % 41.5 % 43.2 %
45.0 % 42.5 % 42.8 %
44.7 % 47.8 % 45.2 %
Operating expenses Research and development 20,011 19,078
18,400 16,758 74,247 18,652 19,029 20,950 58,631 13.9 % 2,550 Sales
and marketing 29,494 34,259 36,581 45,842 146,176 37,348 37,847
43,048 118,243 17.7 % 6,467 General and administrative 31,743
31,519 36,793 35,330 135,385 27,506 32,866 31,620 91,993 -14.1 %
(5,173 ) Impairment of goodwill and other - 729 - 6,100 6,829 - - -
- - - Gains, losses and other items, net 807 2,504
4,058 4,763 12,132
314 300 2,111 2,724
-48.0 % (1,947 ) Total operating expenses 82,055 88,089
95,832 108,793 374,769 83,820 90,042 97,729 271,591 2.0 % 1,897
Income (loss) from operations (2,869 ) (2,056 ) (374 )
(7,764 ) (13,063 ) 8,162 7,120 9,115 24,397 2537.2 % 9,489
%
Margin -1.5 % -1.0 % -0.2
% -3.5 % -1.5 % 3.8
% 3.3 % 4.1 % 3.7
% Other income (expense) Interest expense (1,885 ) (1,956 )
(1,948 ) (1,880 ) (7,669 ) (1,812 ) (1,689 ) (1,743 ) (5,244 ) 10.5
% 205 Other, net 304 59 303
(214 ) 452 307 (207 ) 35
135 -88.4 % (268 ) Total other expense (1,581
) (1,897 ) (1,645 ) (2,094 ) (7,217 ) (1,505 ) (1,896 ) (1,708 )
(5,109 ) -3.8 % (63 ) Earnings (loss) from continuing
operations before income taxes (4,450 ) (3,953 ) (2,019 ) (9,858 )
(20,280 ) 6,657 5,224 7,407 19,288 466.9 % 9,426 Income taxes 732
(2,608 ) (1,580 ) (8,176 )
(11,632 ) 2,681 (1,916 ) 6,334
7,099 500.9 % 7,914 Net earnings (loss) from
continuing operations (5,182 ) (1,345 ) (439 ) (1,682 ) (8,648 )
3,976 7,140 1,073 12,189 344.4 % 1,512 Earnings (loss) from
discontinued operations, net of tax 4,143 12,068
(971 ) 111 15,351 -
- - - 100.0 % 971
Net earnings (loss) (1,039 ) 10,723 (1,410 ) (1,571 ) 6,703
3,976 7,140 1,073 12,189 176.1 % 2,483 Diluted earnings
(loss) per share (0.01 ) 0.14 (0.02 )
(0.02 ) 0.09 0.05 0.09
0.01 0.15 174.2 % 0.03 Diluted earnings
(loss) per share continuing operations (0.07 ) (0.02 )
(0.01 ) (0.02 ) (0.11 ) 0.05
0.09 0.01 0.15 338.2 % 0.02
Some earnings (loss) per share amounts may not add due to
rounding Basic shares 77,918 77,960 77,831 76,753 77,616
77,471 77,446 77,507 77,475 Diluted shares 79,352 79,310 79,346
78,386 79,099 79,353 79,277 79,851 79,494
ACXIOM CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP TO
NON-GAAP EPS (1) (Unaudited) (Dollars in thousands, except earnings
(loss) per share)
06/30/15 09/30/15 12/31/15 03/31/16
FY2016 06/30/16 09/30/16 12/31/16 YTD
FY2017 Earnings (loss) from continuing operations
before income taxes (4,450 ) (3,953 ) (2,019 ) (9,858 ) (20,280 )
6,657 5,224 7,407 19,288 Income taxes 732
(2,608 ) (1,580 ) (8,176 ) (11,632 ) 2,681
(1,916 ) 6,334 7,099 Net
earnings (loss) from continuing operations (5,182 ) (1,345 ) (439 )
(1,682 ) (8,648 ) 3,976 7,140 1,073 12,189 Earnings (loss)
from discontinued operations, net of tax 4,143 12,068
(971 ) 111 15,351 -
- - - Net earnings (loss)
(1,039 ) 10,723 (1,410 ) (1,571 )
6,703 3,976 7,140 1,073
12,189 Earnings (loss) per share: Basic (0.01
) 0.14 (0.02 ) (0.02 ) 0.09
0.05 0.09 0.01 0.16
Diluted (0.01 ) 0.14 (0.02 )
(0.02 ) 0.09 0.05 0.09 0.01
0.15 Excluded items: Purchased intangible
asset amortization (cost of revenue) 3,754 3,754 3,754 4,204 15,466
4,077 3,890 4,621 12,588 Non-cash stock compensation (cost of
revenue and operating expenses) 8,123 7,360 8,046 7,934 31,463
8,590 11,938 13,427 33,955 Impairment of goodwill and other - 729 -
6,100 6,829 - - - - Restructuring and merger charges (gains,
losses, and other) 807 2,504 4,058 4,763 12,132 314 929 2,111 3,354
Gain on sale of Impact (gains, losses, and other) - - - - - - (629
) - (629 ) Separation and transformation costs (general and
administrative) 3,414 6,098 6,628 4,686 20,826 - 1,455 4,118 5,573
Accelerated amortization (cost of revenue) 1,442 78
78 252 1,850 -
- - - Total excluded
items, continuing operations 17,540 20,523
22,564 27,939 88,566
12,981 17,583 24,277 54,841
Earnings from continuing operations before
income taxes and excluding items
13,090 16,570 20,545 18,081 68,286 19,638 22,807 31,684 74,129
Income taxes 5,632 5,163 6,399
4,262 21,456 7,852 8,910
12,751 29,513 Non-GAAP net
earnings 7,458 11,407 14,146
13,819 46,830 11,786 13,897
18,933 44,616 Non-GAAP earnings
per share: Basic 0.10 0.15 0.18
0.18 0.60 0.15 0.18
0.24 0.58 Diluted 0.09
0.14 0.18 0.18
0.59 0.15 0.18 0.24 0.56
Basic weighted average shares 77,918 77,960
77,831 76,753 77,616
77,471 77,446 77,507 77,475
Diluted weighted average shares 79,352
79,310 79,346 78,386
79,099 79,353 79,277 79,851
79,494 Some earnings per share amounts may not add
due to rounding
(1)
This presentation includes non-GAAP
measures. Our non-GAAP measures are not meant to be considered in
isolation or as a substitute for comparable GAAP measures, and
should be read only in conjunction with our condensed consolidated
financial statements prepared in accordance with GAAP. For a
detailed explanation of the adjustments made to comparable GAAP
measures, the reasons why management uses these measures and the
material limitations on the usefulness of these measures, please
see Appendix A.
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT (Unaudited) (Dollars in thousands)
Q3 FY17 to Q3 FY16
06/30/15 09/30/15 12/31/15 03/31/16
FY2016 06/30/16 09/30/16 12/31/16 YTD FY2017 %
$ Revenues: Marketing Services 107,726 112,979
115,725 113,342 449,772 109,715 105,679 101,177 316,571 -12.6 %
(14,548 ) Audience Solutions 68,550 72,122 77,046 80,128 297,846
73,744 78,526 83,399 235,669 8.2 % 6,352 Connectivity 20,619
22,244 28,422 31,185
102,470 31,342 33,062
38,736 103,140 36.3 % 10,314 Total
operating segment revenues 196,895 207,345
221,193 224,655 850,088
214,801 217,267 223,312
655,380 1.0 % 2,118 Gross profit: Marketing
Services 36,034 37,545 38,561 40,117 152,257 37,466 34,480 37,494
109,440 -2.8 % (1,067 ) Audience Solutions 36,824 39,170 45,265
46,457 167,716 41,912 47,998 53,120 143,030 17.4 % 7,855
Connectivity 11,953 13,499 16,130
19,617 61,199 17,575
19,843 23,091 60,509 43.2
% 6,961 Total operating segment gross profit 84,811
90,214 99,956 106,191
381,172 96,953 102,321
113,705 312,979 13.8 % 13,749 Gross
margin: Marketing Services 33.4 % 33.2 % 33.3 % 35.4 % 33.9
% 34.1 % 32.6 % 37.1 % 34.6 % Audience Solutions 53.7 % 54.3 % 58.8
% 58.0 % 56.3 % 56.8 % 61.1 % 63.7 % 60.7 % Connectivity 58.0 %
60.7 % 56.8 % 62.9 % 59.7 % 56.1 % 60.0 % 59.6 % 58.7 %
Total operating segment gross margin 43.1 % 43.5 % 45.2 % 47.3 %
44.8 % 45.1 % 47.1 % 50.9 % 47.8 % Income (loss) from
operations: Marketing Services 16,853 17,908 20,309 19,301
74,371 20,145 19,837 21,127 61,109 4.0 % 818 Audience Solutions
24,087 25,190 30,723 29,598 109,598 25,096 29,972 34,572 89,640
12.5 % 3,849 Connectivity (791 ) (1,068 ) (1,015 )
(424 ) (3,298 ) 291 1,663
1,877 3,831 284.9 % 2,892 Total
operating segment income from operations 40,149
42,030 50,017 48,475
180,671 45,532 51,472 57,576
154,580 15.1 % 7,559 Operating income
(loss) margin: Marketing Services 15.6 % 15.9 % 17.5 % 17.0
% 16.5 % 18.4 % 18.8 % 20.9 % 19.3 % Audience Solutions 35.1 % 34.9
% 39.9 % 36.9 % 36.8 % 34.0 % 38.2 % 41.5 % 38.0 % Connectivity
-3.8 % -4.8 % -3.6 % -1.4 % -3.2 % 0.9 % 5.0 % 4.8 % 3.7 %
Total operating segment operating margin 20.4 % 20.3 % 22.6 % 21.6
% 21.3 % 21.2 % 23.7 % 25.8 % 23.6 % Some totals may not add
due to rounding. ACXIOM CORPORATION AND
SUBSIDIARIES
RECONCILIATION OF
GAAP TO NON-GAAP EPS GUIDANCE (1)
(Unaudited) (Dollars in thousands, except earnings per share)
For the year ending March 31, 2017 Earnings
before income taxes 13,000 Income taxes 4,000
Net earnings 9,000 Diluted earnings per share $ 0.11
Excluded items: Purchased intangible asset amortization
19,000 Non-cash stock compensation 50,000 Gains, losses and other
items, net 2,000 Separation and transformation costs 8,000
Total excluded items 79,000 Earnings before
income taxes and excluding items 92,000 Income taxes (2)
36,000 Non-GAAP net earnings 56,000
Non-GAAP diluted earnings per share $ 0.70 Diluted weighted
average shares 80,000
(1)
This presentation includes non-GAAP
measures. Our non-GAAP measures are not meant to be considered in
isolation or as a substitute for comparable GAAP measures, and
should be read only in conjunction with our condensed consolidated
financial statements prepared in accordance with GAAP. For a
detailed explanation of the adjustments made to comparable GAAP
measures, the reasons why management uses these measures, the
usefulness of these measures and the material limitations on the
usefulness of these measures, please see Appendix A.
(2)
Income taxes were calculated using an
effective non-GAAP tax rate of 39.0%. The difference between our
GAAP and Non-GAAP tax rates was due to the effect of excluded
items, including the federal and state income tax benefit related
to the sale of Impact.
ACXIOM CORPORATION APPENDIX A Q2 FISCAL 2017 FINANCIAL
RESULTS EXPLANATION OF NON-GAAP MEASURES
To supplement our financial results, we
use non-GAAP measures which exclude certain acquisition related
expenses, non-cash stock compensation and restructuring charges. We
believe these measures are helpful in understanding our past
performance and our future results. Our non-GAAP financial measures
and schedules are not meant to be considered in isolation or as a
substitute for comparable GAAP measures and should be read only in
conjunction with our consolidated GAAP financial statements. Our
management regularly uses these non-GAAP financial measures
internally to understand, manage and evaluate our business and to
make operating decisions. These measures are among the primary
factors management uses in planning for and forecasting future
periods. Compensation of our executives is also based in part on
the performance of our business based on these non-GAAP
measures.
Our non-GAAP financial measures, including
non-GAAP earnings per share and adjusted EBITDA, reflect
adjustments based on the following items, as well as the related
income tax effects when applicable:
Purchased intangible
asset amortization: We incur amortization of purchased
intangibles in connection with our acquisitions. Purchased
intangibles include (i) developed technology, (ii) customer
relationships, and (iii) trade names. We expect to amortize for
accounting purposes the fair value of the purchased intangibles
based on the pattern in which the economic benefits of the
intangible assets will be consumed as revenue is generated.
Although the intangible assets generate revenue for us, we exclude
this item because this expense is non-cash in nature and because we
believe the non-GAAP financial measures excluding this item provide
meaningful supplemental information regarding our operational
performance.
Non-cash stock
compensation: Non-cash stock compensation consists of
charges for associate restricted stock units, performance shares
and stock options in accordance with current GAAP related to
stock-based compensation including expense associated with
stock-based compensation related to unvested options assumed in
connection with our acquisitions. As we apply stock-based
compensation standards, we believe that it is useful to investors
to understand the impact of the application of these standards to
our operational performance. Although stock-based compensation
expense is calculated in accordance with current GAAP and
constitutes an ongoing and recurring expense, such expense is
excluded from non-GAAP results because it is not an expense that
typically requires or will require cash settlement by us and
because such expense is not used by us to assess the core
profitability of our business operations.
Restructuring
charges: During the past several years, we have initiated
certain restructuring activities in order to align our costs in
connection with both our operating plans and our business
strategies based on then-current economic conditions. As a result,
we recognized costs related to termination benefits for associates
whose positions were eliminated, lease termination charges, and
leasehold improvement write offs. During the current year, we also
recognized a gain of the sale of the Acxiom Impact business. These
items, reported as gains, losses, and other items, net, are
excluded from non-GAAP results because such amounts are not used by
us to assess the core profitability of our business operations.
Merger
expenses: During the current year we have incurred certain
third party expenses associated with the acquisitions of Arbor and
Circulate. These items, reported as gains, losses and other items,
net, are excluded from non-GAAP results because such amounts are
used by us to assess the core profitability of our business
operations.
Separation and
transformation costs: In prior years, we incurred
significant expenses in connection with the separation of our IT
Infrastructure Management ("ITO") and the subsequent transformation
of our remaining operating segments. This work enabled us to
transform our external reporting and provide investors with
enhanced transparency and more granular segment-level disclosures
in addition to facilitating the ITO disposition. In the current
year, we are incurring expenses to further separate the financial
statements of our three operating segments, with particular focus
on segment-level balance sheets, and to evaluate portfolio
priorities. Our criteria for excluding separation and
transformation expenses from our non-GAAP measures is as follows:
1) projects are discrete in nature; 2) excluded expenses consist
only of third-party consulting fees that we would not incur
otherwise; and 3) we do not exclude employee related expenses or
other costs associated with the ongoing operations of our business.
We expect to complete these current projects in the next 8 to 12
months. We believe excluding these items from our non-GAAP
financials measures is useful for investors and provides meaningful
supplemental information.
Our non-GAAP financial schedules are:
Non-GAAP EPS and
Non-GAAP Income (loss) from Operations: Our non-GAAP
earnings per share and Non-GAAP income (loss) from operations
reflect adjustments as described above, as well as the related tax
effects where applicable.
Adjusted
EBITDA: Adjusted EBITDA is defined as net income (loss) from
continuing operations before income taxes, other expenses,
depreciation and amortization, and including adjustments as
described above. We use Adjusted EBITDA to measure our performance
from period to period both at the consolidated level as well as
within our operating segments and to compare our results to those
of our competitors. We believe that the inclusion of Adjusted
EBITDA provides useful supplementary information to and facilitates
analysis by investors in evaluating the Company's performance and
trends. The presentation of Adjusted EBITDA is not meant to be
considered in isolation or as an alternative to net earnings as an
indicator of our performance.
Free Cash Flow to
Equity: To supplement our statement of cash flows, we use a
non-GAAP measure of cash flow to analyze cash flows generated from
operations. Free cash flow to equity is defined as operating cash
flow less cash used by investing activities (excluding the impact
of cash paid in acquisitions), less required payments of debt, and
excluding the impact of discontinued operations. Management
believes that this measure of cash flow is meaningful since it
represents the amount of money available from continuing operations
for the Company's discretionary spending after funding all required
obligations including scheduled debt payments. The presentation of
non-GAAP free cash flow to equity is not meant to be considered in
isolation or as an alternative to cash flows from operating
activities as a measure of liquidity.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170131006351/en/
Acxiom CorporationLauren Dillard, 650-372-2242Investor
Relationsinvestor.relations@acxiom.comEACXM
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